“An Alien Individual” – Who Me?

Extraterrestrial Life: life which does not originate from Earth…
ORAlien: a non-citizen inhabitant of a country…

I guess that’s me!

In the eyes of the USA, I am an “alien” individual and as such, I need to meet the “closer connection exception” to the “substantial presence test”. Whew, that’s a mouthful! I needed to complete and file Form 8840 “Closer Connection Exception Statement for Aliens” with the IRS to establish my claim that I am a non-resident of the US. I was able to complete the form on line but I had to mail a signed, printed original to Austin, TX no later than June 15th. You can get more information about Form 8840 and its instructions here.

I could be considered a U.S. resident if I was physically present in the U.S. for at least:

31 days during 2014 and

183 days during the period 2014, 2013 and 2012, counting:- all the days of physical presence in 2014
– 1/3 of the days of physical presence in 2013, and
– 1/6 of the days of physical presence in 2012

This is the “Substantial Presence Test”.

As reported in 2014, my physical presence looks like this:

So far in 2015 we have spent 105 days and we are estimating another 60 days for a total of 165 days in the U.S. Next year, my physical presence calculation will look something like this:

Each year I will be required to calculate the days to satisfy the IRS that I meet the substantial presence test but I will not be treated as a U.S. resident if:

I was present in the U.S. for fewer than 183 days (in each current calendar year); and

I can establish that I had a tax home in a foreign country [Canada].

In the year 2 calculation above, even though the 3 year total is greater than 183 days, I was present in the US for only 165 days in 2015 – less than the maximum 183 days.

There were 25 very easy questions that I had to answer to support my claim that my tax home is Canada such as:

where was my driver’s license issued?

where am I registered to vote?

where is my family located?

where is my bank located?

what country issued my passport?

from what country or countries did I derive the majority of my income?

in what country or countries did I keep my personal, financial and legal documents?

Definitely nothing to worry about in 2014, but we’re going to have to watch this carefully in subsequent years as we max out our stay in the warmer climates. There is a Canadian retiree visa initiative [JOLT Act] that was successfully passed by the U.S. Senate, however, it failed to be called for a vote in the House of Representatives during the last session of Congress. Apparently the Act enjoys strong bipartisan support from both Democrats and Republicans so there is no doubt it will be reintroduced. If successful this will increase the number of days to +200 which will be great – but I doubt it will remove the requirement to file this Form 8840.

On a good note, Chuck is exempt from this exercise – he’s not an “Alien” – in the eyes of the USA!